SECRETARY, DEPARTMENT OF FAMILIES, HOUSING, COMMUNITY SERVICES AND INDIGENOUS AFFAIRS and MICHELLE HODGE
[2010] AATA 360
•17 May 2010
Administrative Appeals Tribunal
DECISION AND REASONS FOR DECISION [2010] AATA 360
ADMINISTRATIVE APPEALS TRIBUNAL )
) No 2009/4177
GENERAL ADMINISTRATIVE DIVISION ) Re SECRETARY, DEPARTMENT OF FAMILIES, HOUSING, COMMUNITY SERVICES AND INDIGENOUS AFFAIRS Applicant
And
MICHELLE HODGE
Respondent
DECISION
Tribunal Mr S. Webb, Member Date17 May 2010
PlaceCanberra
Decision The decision under review is affirmed.
..............................................
Mr S. Webb, Member
CATCHWORDS
FAMILY TAX BENEFIT – past period claim – change in shared care percentage – informal notification of change – shared care percentage not determined by the Secretary at the time – shared care percentage not provided in the claimant's annual tax return – benefit paid did not reflect change in shared care percentage – overpayment debt – administrative error by Commonwealth – debt not solely due to administrative error of Commonwealth – special circumstances – Commonwealth errors productive of unfairness – desirable to waive – decision affirmed
A New Tax System (Family Assistance) Act 1999 ss 22, 59
A New Tax System (Family Assistance) (Administration) Act 1999 ss 7, 14, 17, 24, 25, 25A, 70, 71, 77, 95, 96, 97, 101
Dranichnikov v Centrelink [2003] FCAFC 133
Fischer v Secretary, Department of Families, Housing, Community Services & Indigenous Affairs [2010] FCA 441
Secretary, Department of Social Security and McAvoy (1996) 44 ALD 721
Sekhon v Secretary, Department of Family and Community Services [2003] FCAFC 190
REASONS FOR DECISION
17 May 2010 Mr S. Webb, Member 1. Michelle Hodge has two children with her former husband Patrick Downey. Court orders were made concerning the care of the children, including an arrangement for shared care from 4 February 2008. Prior to this date Ms Hodge had full care of the children and claimed Family Tax Benefit (FTB). Her claim was for payment of FTB for a past period. The amount of FTB she was paid in the 2007-2008 tax year did not take into account the shared care arrangement from February 2008. Subsequently an overpayment debt was raised against her and the debt was recovered by instalments. Ms Hodge requested review of this decision, contending that the debt amount was incorrect and that the debt arose solely as the result of Commonwealth error by Centrelink, the Family Assistance Office (FAO) or the Australian Tax Office (ATO). When the matter came before the Social Security Appeals Tribunal (SSAT) that Tribunal found in Ms Hodge’s favour, varying the amount of the debt and deciding that recovery of the debt should be waived on the basis of error. The responsible Secretary does not agree with the decision of the SSAT and has applied for review.
2. I was informed at the outset of the hearing that certain issues were agreed. Mr Parker, the advocate for the Secretary, informed me that the amount of the overpayment was no longer in dispute – the Secretary conceded that the amount determined by the SSAT is correct. Ms Hodge agreed. Thus, I will proceed on the basis that the amount of Ms Hodge’s overpayment debt is $1,069.12 pursuant to section 71 of the A New Tax System (Family Assistance) (Administration) Act 1999 (the Administration Act). It follows that it is not necessary to consider issues relating to section 22 of the A New Tax System (Family Assistance) Act 1999 (the Assistance Act) or the shared care arrangements and related percentages in respect of the children.
3. The issues remaining in dispute that must be decided are whether recovery of Ms Hodge’s overpayment debt should be waived on the basis of Commonwealth error or special circumstances.
4. The relevant facts are as follows:
(a)Ms Hodge separated from Mr Downey in December 2006 and had full care of their two children until 3 February 2008;
(b)in September 2007 court orders were made by consent, whereby Ms Hodge and Mr Downey agreed to a shared care arrangement in respect of the children from 4 February 2008;
(c)on 8 October 2007 Ms Hodge contacted Centrelink by telephone and provided an estimate for FAO purposes[1];
[1] T20 folio 97.
(d)on 1 November 2007 she contacted the FAO in relation to a childcare claim[2];
[2] T20 folio 97.
(e)on 28 February 2008 she attended the FAO in relation to a childcare matter[3];
[3] T20 folio 97; T4 folio 44 refers.
(f)on 21 May 2008 she attended the FAO and lodged a childcare claim[4] in which she ticked ‘Yes’ to the question ‘Have your details changed?’ and included the following annotation:
[4] Exhibit R2.
From 4 February 2008 Guinness & April started a “shared care” arrangement whereby 9 nights a fortnight are spent with me and 5 nights a fortnight are spent with the dad, Patrick John Downey. CSA are aware of this change.[5]
[5] Exhibit R2, p4.
(g)in July 2008 Ms Hodge lodged a tax return for the 2007-2008 tax year via her tax agent, Mr Eligio Solari, including an FTB claim. Ms Hodge did not provide the shared care percentage for each of her children, but recorded ‘S’ in the child status field of the FTB claim[6];
[6] Exhibit R1, p4.
(h)on 1 August 2008 Ms Hodge was sent a letter by Centrelink concerning her FTB assessment for the 2007-2008 tax year[7], in which it was written:
[7] T5 folios 45-46.
Your entitlement for the financial year 2007-08 has been assessed using your annual family income and your family circumstances.
…
The payment shown above has been sent to the ATO to include in your tax assessment.
…
Information you provided to the Family Assistance Office may be used for data matching with other Government agencies to detect and prevent incorrect payments and fraud.
(i)on 17 August 2008 Ms Hodge received a letter from the Child Support Agency stating that her shared care percentage was 69.8%;
(j)on 3 November 2008 Ms Hodge lodged responses to questions concerning her children at the Centrelink office in Gungahlin, with the following annotation:
Guinness and April have since 4 Feb 08 lived 9 night with me then 5 with their dad in each fortnight prior to that I had full care of both children – this has been previously advised to both FAO and CSA.[8]
(k)on 15 November 2008 Centrelink send Ms Hodge a letter informing her that she had been overpaid FTB in the amount of $1,231.36[9];
(l)on 5 January 2009 the FAO reconsidered the matter and affirmed the overpayment decision[10];
(m)on 30 January 2009 Ms Hodge lodged a request for review[11];
(n)on 18 March 2009 an authorised review officer decided to vary the amount of the overpayment to Ms Hodge from $1,231.36 to $1,172.16[12];
(o)on 26 March 2009 Ms Hodge appealed to the SSAT;
(p)on 27 July 2009 the SSAT decided to set aside the decision, finding that Ms Hodge was overpaid $1,069.12 and waiving the debt as it was due solely to administrative error[13];
(q)on 4 September 2009 the Secretary’s request for review was lodged in this tribunal.
[8] T6 folio 47.
[9] T8 folios 50-52; T7 refers.
[10] T11 folios 65-66.
[11] T13.
[12] T15 and T16; T17 refers.
[13] T2.
error
5. Ms Hodge says that her overpayment debt only arose because of administrative errors made by Centrelink, the FAO and the ATO. The errors she alleges Centrelink made are set out in her written submissions[14]. She says that she received the money she was paid in FTB in good faith and that recovery of the overpayment amount has caused financial hardship. For these reasons, Ms Hodge submits that the debt should be waived on the grounds of administrative error.
[14] Respondent’s written submissions, 28 April 2010; T13 refers.
6. I do not agree.
7. An overpayment debt cannot simply be waived because of an administrative error by the Commonwealth. Waiver on the grounds of error is subject to satisfaction of each of the essential preconditions that are set out in section 97 of the Administration Act; if the preconditions are satisfied, the debt must be waived. There are three preconditions. Firstly, the debt, or a portion thereof, must be attributable solely to an administrative error made by the Commonwealth – if administrative error by the Commonwealth is but one of a number of causes, the first criterion is not satisfied: the words ‘attributable solely’ in section 1237A of the Social Security Act 1991 (Social Security Act) carry their ordinary meaning[15], and I see no reason to adopt a different approach in relation to section 97 of the Administration Act. The second precondition is that the debtor must have received the subject overpayments in good faith; and the third criterion is that the person would suffer ‘severe financial hardship’ if the debt is not waived.
[15] Sekhon v Secretary, Department of Family and Community Services [2003] FCAFC 190 at [23] per Nicholson J; [46] per Selway J.
8. It is tolerably clear that Ms Hodge’s overpayment debt is attributable substantially but not solely to administrative errors of the Commonwealth. It is plain enough that Ms Hodge provided information concerning her changed care arrangements in respect of the children to the FAO, albeit in the context of child care arrangements, prior to the changes coming into effect. But that information was not acted upon by the Commonwealth, in error. Nevertheless, the effect of that error was remediable by information Ms Hodge was required to provide concerning her percentages of care in respect of her children in her annual tax return. But she omitted to provide this information on the advice of her tax agent. That was in error, even though Centrelink and the FAO had failed to determine her percentage of care pursuant to the information she provided, and the ATO did not respond to her inclusion of the letter ‘S’ in the appropriate part of her tax return. I am reasonably satisfied that Ms Hodge’s overpayment debt is also attributable to these errors. Even though the errors of the Commonwealth are of greater magnitude and import than Ms Hodge’s, and acknowledging that her error arose on the basis of advice she was given by her tax agent, her overpayment debt cannot be waived under section 97 of the Administration Act.
9. But that is not the end of the matter.
special circumstances
10. The Secretary asserts that there is nothing unusual, uncommon or exceptional in the circumstances of Ms Hodge’s case that render it desirable to waive all or part of her overpayment debt. The Secretary says that Ms Hodge is “in a more advantageous situation than other recipients of Centrelink payments” and there is no evidence of financial hardship[16]. That being so, the Secretary submits that the debt cannot be waived on the basis of special circumstances.
[16] Applicant’s written submissions, 9 April 2010, p4.
11. I do not agree.
12. Section 101 of the Administration Act sets out the preconditions pertaining to any such waiver, of which there are three.
13. Firstly, the debt must not result from the debtor or another person knowingly making a false statement or representation, or knowingly failing or omitting to comply with a requirement of the Administration Act. Secondly, special circumstances must exist that make it desirable to waive the debt. The meaning of the term ‘special circumstances’ has been the subject of many cases over a long period, some of which the Secretary has drawn attention to in written submissions. It is not necessary to recite all those cases here. Thirdly it must be more appropriate to waive rather than write off all or part of the debt.
14. There is no evidence that Ms Hodge made a false statement or that she knowingly failed to comply with the requirements of the Act. On the contrary, the evidence is that she sought to comply with those requirements and believed that she had. She asked for guidance from relevant officers on at least two occasions and she followed the advice she was given; she provided information because she believed that she should, but the information was not acted upon. I so find.
15. I have great difficulty accepting the proposition put for the Secretary, at least impliedly, that these administrative errors are not uncommon or unusual and do not take this case out from the normal run of cases[17]. Were that to be true, the frequency and nature of administrative errors occurring in the normal case would be unacceptably high. No evidence was adduced to support any such conclusion.
[17] See Secretary, Department of Family and Community Services v Chamberlain (2002) 116 FCR 348 at [19] and Dranichnikov v Centrelink [2003] FCAFC 133 at [65] to Hill J, for example.
16. It is reasonable to proceed on the basis that errors of the kind that were made by Commonwealth officers in this case are not so commonplace that they occur in the usual run of cases. That does not mean that such errors do not occur in other cases, one can accept that they do. It is not necessary for the circumstances, in this case the administrative errors, to be unique to the individual for special circumstances to exist[18]. Furthermore, the errors of the Commonwealth are productive of unfairness to Ms Hodge. That result is able to be remedied if the preconditions to the exercise of discretion under section 101 are made out. It appears to me that the purpose of section 101 is to provide relief in circumstances that may arise from time to time in the administration of the FTB scheme that, without such recourse, would result in unfairness, injustice or unintended consequences[19]. Following the approach set out in Sekhon v Secretary, Department of Family and Community Services[20] in relation to equivalent provisions of the Social Security Act, which is equally applicable here, waiver under section 101 of the Administration Act is not barred simply because waiver under section 97 of that Act is not available in the particular circumstances.
[18] Fischer v Secretary, Department of Families, Housing, Community Services & Indigenous Affairs [2010] FCA 441 at page 17.
[19] Secretary, Department of Family and Community Services v Chamberlain (2002) 116 FCR 348 at [19].
[20] [2003] FCAFC 190, per Nicholson J at [23] and per Selway J at [45].
17. As it appears to me, Ms Hodge was entitled to follow the advice she was given by Commonwealth officers in respect of her changed care arrangements and she was entitled to proceed on the basis that information she provided would be properly acted upon. That is what she did. As the Tribunal said in Secretary, Department of Social Security and McAvoy:
Any failure to regard the seriousness of the consequences of the giving of wrong advice as not being a circumstance special to the person or persons who have suffered as a result of that advice would be cruel. [21]
[21] (1996) 44 ALD 721 at [51].
18. The fact that Ms Hodge made an innocent error, following advice she was given by her tax agent, does not diminish the significance of the errors made by Commonwealth officers in her case, and it does not diminish the resulting unfairness to Ms Hodge. Had no Commonwealth errors been made, it is probable that Ms Hodge would not have incurred an overpayment debt. That is not to apply a ‘but for’ test, for to do so would not be appropriate in this context. One must look to the entirety of the circumstances, including in that frame the general administration of the tax system insofar as it relates to FTB. The Assistance Act provides two mechanisms for people to claim FTB. Ms Hodge, like many others, chose to use the past payment method. By her own account, which I accept, she did so in order to protect against any overpayment based on her income. She was denied that result, at least in substantial part, by the errors made by Commonwealth officers. Those errors set her case apart from others in which FTB claimants have declared changes in care arrangements for their children, but where no such errors were made.
19. I am satisfied that the Commonwealth’s errors in Ms Hodge’s case are special circumstances that make it desirable to waive her debt. The fact that her debt is attributable in part to her own error, albeit an innocent error, must also be considered. Considering the relative significance of these errors I am satisfied that the errors of the Commonwealth are of substantially greater significance, in that they are productive of unfairness, which if left unrectified would equate to injustice that stands contrary to the intention of the waiver provisions.
20. Finally, with regard to the third preconditioning factor, there are no grounds to write-off the debt under section 95 of the Administration Act.
21. In conclusion, therefore, Ms Hodge’s debt in the amount of $1,069.12 will be waived in the special circumstances of her case and the decision under review will be affirmed, albeit for different reasons than those expressed by the SSAT.
I certify that the 21 preceding paragraphs are a true copy of the reasons for the decision herein of Mr S. Webb, Member
Signed: .......................................................................
AssociateDate/s of Hearing 24 March 2010
Date of Decision 17 May 2010
Solicitor for the Applicant Self-represented
Solicitor for the Respondent Centrelink Advocacy & Litigation Branch
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